NEW YORK (AdAge.com) -- Fan outrage would be the least of the fallout if a breakdown in negotiations leads to an NFL lockout during the 2011 season. Add up lost TV ad revenue and sponsor activations, canceled fantasy football leagues and websites, empty sports bars and out-of-work stadium personnel and the price tag would be somewhere north of $12 billion.
That's a lot of touchdowns. But it's indicative of the cachet the NFL commands -- and it's what will happen if the league and the NFL Players Association fail to renew their collective bargaining agreement, which expires on March 1.
"The football marketplace has just gone off the charts," said Larry Mann, exec VP for Chicago-based sports marketing firm rEvolution. "You take that away and you have big, big problems. It's a domino effect."
NFL Commissioner Roger Goodell took the problem straight to the public last week when he penned a letter to NFL fans and season ticket-holders calling for equity among players and owners (players currently receive almost 60% of revenue), an 18-game regular season (instead of 16 games) and a rookie salary cap, among other things.
Whether the Goodell letter is a stroke of genius to sway public sentiment -- after all, the players and unions don't have access to the league's email database -- or a cheap tactic to sow resentment between fans and players, one thing is clear: "If [a strike] goes on through the summer and there's no football come September, well, there are very few winners here and a lot of losers," said David Carter, principal of the Los Angeles-based Sports Business Group and the executive director of the University of Southern California Sports Business Institute.
Start with the networks and advertisers.
"Right now," said one network executive, "we're in no-man's land."
Fox, CBS, NBC, ESPN and DirecTV pay a combined $4 billion annually in TV rights deals with the NFL -- deals that will stay in place even if there's no 2011 season, a bone of contention for the Players Association, which filed a grievance saying the money should be put in escrow instead of in the NFL's war chest. The networks get back $3 billion a year in ad revenue on NFL games. While some of that would be placed in other programming, it will be hard for anything to measure up to the NFL, which is enjoying a ratings increase.
"Where every other content is getting fractionalized, the NFL is thriving," said Brad Adgate, senior VP-research of Horizon Media. "I just don't know if you can replace that." He said ESPN will be hit hardest because so much fourth-quarter programming, from pregame to 'SportsCenter,' revolves around the sport.
"We continue to monitor the situation. We're hopeful both sides will find a resolution and there will be no interruption of play," said a spokesman for ESPN, which despite the possible labor crisis is seeking, according to a published report, a nine- or 10-year deal extension with the NFL that would jump the annual rights fee from $1.1 billion to $1.8 billion or $1.9 billion. Its current deal expires in 2013. Sponsors are proceeding with cautious optimism.
"We continue to be very optimistic that the parties will find a solution," said Anheuser-Busch InBev CEO Carlos Brito on a recent earnings call. Mr. Brito's Bud Light beer is paying $1.2 billion over six years to be the NFL's official beer sponsor starting with the 2011 season. "In the unlikely case that they can't find a solution, money will be reallocated to other activities."
The brewer's U.S. unit, Anheuser-Busch, declined to say exactly how it would reallocate the money. "We would reinvest those dollars to reach Bud Light consumers in other relevant ways," said Gregg Billmeyer, VP-Premium Lights for Anheuser-Busch.
But that's easier than it sounds, because there's nothing like sports and the NFL. According to Horizon Media, 11 of the 13 TV programs that averaged 30 million viewers or more were live sports or sports-related programming.
Meanwhile, the $5 billion fantasy football arena could be wiped out entirely -- along with fantasy advertising on big sports sites like Yahoo Sports and CBSSports.com receive.
Las Vegas sports books are looking at an $850 million loss, said Wynn Las Vegas Hotel sports book and race director Johnny Avello.
"And that's nothing in the grand scheme of things," Mr. Avello said. "You start counting up the online betting, betting in other countries and, of course, illegal sports books, and it could be as much as $500 billion worldwide wagered on pro football. We might as well just go and spend more time at church on Sundays."
Sports bars will certainly feel the brunt of a lockout.
"It would be a killer, straight up. It would probably put us out of business," said Mike Pressley, manager of the Cheyenne Grill and Sports Bar in Atlanta. Mr. Pressley noted that football Sundays account for 20% of his weekly sales and is 35% more than the next-closest day.
Even the NFL itself stands to lose almost $1 billion.
"We will lose economic opportunities, we will lose revenue," said Jeff Pash, the NFL's general counsel, exec VP-labor and chief negotiator said.
THE NFL: It has way more in the war chest than the Players Association, it's likely going to get its 18-game season, and it will pump up its own NFL Network with more live game coverage that could finally settle those nasty disputes with Cablevision and Time Warner Cable.
MLB, NBA, NHL, NASCAR: More ad dollars could come their way with no football.
COUNTER PROGRAMMING: Which, of course, wouldn't be "counter" programming any more if there was no NFL to counter.
THE NFL: $1 billion in losses at stake if season tickets aren't renewed and preseason training camps and games are canceled, not to mention some brand equity.
THE NETWORKS: $3 billion in lost advertising revenue on NFL broadcasts if there's a lockout.
SPONSORS AND ADVERTISERS: Where's all that money going? "Jersey Shore"?
FANTASY FOOTBALL: It's a $5 billion annual business. Not only are fantasy players shafted, but so are fantasy-heavy sites like Yahoo Sports and CBSSports.com.
LAS VEGAS: Betting on the NFL in legal sports books brings in three times more money than any other sport.
SPORTS BARS: Sorry, but people are not three-deep with a bucketful of chicken wings at the local Jocks and Jills to watch ATP Tennis.
THE PUBLIC: No pro football? Are you $%#@ kidding?
Brought to you by: The Trade Desk